While acknowledging that insurgents can be expected to keep mounting "terrible attacks," Bush claimed incremental progress in improving security in Baghdad and in Anbar province, seen as an Al-Qaeda hotbed.

Bush has ordered thousands of more American soldiers to Baghdad to quell sectarian violence and terrorist attacks, along with a revised security plan by the Iraqi government.

But deadly bombings have continued, prompting an outburst from Senate majority leader Harry Reid on Thursday that "this war is lost."

His suggestion that US Secretary of State Condoleezza Rice and Defence Secretary Robert Gates knew that the US was defeated provoked an unusually sharp denial from Rice's department.

"Senator Reid is a legislator. He should stick to that, and not try to be a mind-reader," State Department spokesman Sean McCormack said on Friday.

"The secretary has in no way conveyed any such idea to Senator Reid or anybody else," he said.

Americans' disillusionment with the Iraq war has depressed Bush's popularity and lifted the centre-left opposition Democrats into control of Congress in elections last year.

But Bush has steadfastly rejected calls by Democrats and other critics to set a troop pullout timetable. He has vowed to veto military spending bills currently before Congress that would set a withdrawal deadline.

"A president must make decisions on certain principles and not try to chase opinion polls," Bush said at an event sponsored by a foreign-policy think tank.

"If you make decisions based on the latest opinion poll you won't be thinking long-term strategy on behalf of the American people," he said.